Taxes in Japan

Income, residence and other taxes

By Just Landed

Japan - Money

The Japanese word for taxes is zeikin. The Japanese tax system is composed of national and local taxes. Income, sales, and property are all taxed in Japan.

For foreigners, Japanese income tax (shotokuzei) is determined by status of residence. Foreigners who have lived in Japan for less then one year (non-residents) are required to pay income tax only on income generated in Japan.

Foreigners who have lived in Japan for more than one year are separated into those who have stayed in Japan less than five years and those who have stayed more. Both these groups are considered ¨residents¨ under Japanese tax law and are taxed on all income generated in or sent to Japan.

Income tax declaration in Japan

The Japanese tax year runs from January 1 to December 31. Returns must be filed between February 16 and March 15. Foreigners departing Japan before the tax deadline must file their returns before they leave, or designate a proxy to file a return for them. Income tax is only required on income over 380,000 yen.

Possible deductions include provisions for medical costs, spouses and property losses. In each of these cases, documentation is required. Non-residents are not eligible for most deductions.

Non-salaried workers must file their own tax returns and pay to the local tax office themselves. Salaried employees, on the other hand, have their tax contributions withheld by their employers.

Residential tax

Residential tax (juminzei) is paid as a local tax. This tax is based off the previous year´s income, and must be paid if an individual has lived in Japan for more than a year. Residents pay this tax to the municipality that they lived in on January 1.

As with income tax, non-salary workers pay residential tax themselves, making four payments throughout the year (in June, August, October and January). And again, salaried employees have their residential taxes withheld throughout the year.

Other Japanese taxes

People who own land are subject to municipal property tax, which is determined based on the value of the property, and will rise or decline along with that value. If you own a car in Japan, you are subject to light motor vehicle tax.

Depending on where you are from, you may have to file additional tax reports with your home country. Check before you leave for Japan, or with your country´s embassy in Japan for more information.

For foreigners, Japanese income tax (shotokuzei) is determined by status of residence. Foreigners who have lived in Japan for less then one year (non-residents) are required to pay income tax only on income generated in Japan.

Foreigners who have lived in Japan for more than one year are separated into those who have stayed in Japan less than five years and those who have stayed more. Both these groups are considered ¨residents¨ under Japanese tax law and are taxed on all income generated in or sent to Japan.

Income tax declaration in Japan

The Japanese tax year runs from January 1 to December 31. Returns must be filed between February 16 and March 15. Foreigners departing Japan before the tax deadline must file their returns before they leave, or designate a proxy to file a return for them. Income tax is only required on income over 380,000 yen.

Possible deductions include provisions for medical costs, spouses and property losses. In each of these cases, documentation is required. Non-residents are not eligible for most deductions.

Non-salaried workers must file their own tax returns and pay to the local tax office themselves. Salaried employees, on the other hand, have their tax contributions withheld by their employers.

Residential tax

Residential tax (juminzei) is paid as a local tax. This tax is based off the previous year´s income, and must be paid if an individual has lived in Japan for more than a year. Residents pay this tax to the municipality that they lived in on January 1.

As with income tax, non-salary workers pay residential tax themselves, making four payments throughout the year (in June, August, October and January). And again, salaried employees have their residential taxes withheld throughout the year.

Other Japanese taxes

People who own land are subject to municipal property tax, which is determined based on the value of the property, and will rise or decline along with that value. If you own a car in Japan, you are subject to light motor vehicle tax.

Depending on where you are from, you may have to file additional tax reports with your home country. Check before you leave for Japan, or with your country´s embassy in Japan for more information.